Europe’s STOXX 600 edges up in global recovery, earnings relief

By Pranav Kashyap and Ankika Biswas

(Reuters) -European shares rose on Tuesday, mirroring a recovery in global markets after the previous day’s mauling, with energy and technology stocks leading the way as a slew of upbeat corporate earnings also lifted sentiment.

The STOXX 600 closed 0.3% higher, after logging its steepest three-day decline since June 2022 and closing below the key 500-point mark for a second day on Monday on U.S. recession fears.

The “fear gauge” Euro STOXX volatility index also cooled down from its highest level since March 2022 hit on Monday, reflecting an improved investor mood.

Wall Street climbed in volatile trading, as investors looked for bargain hunting, while dovish commentary from Federal Reserve officials also lifted the mood.

Among others, Japan’s Nikkei closed up 10% after its biggest daily sell-off since the 1987 Black Monday crash.

Investor nerves appeared to be soothed after Fed policymakers pushed back against recession concerns, but also warned that the central bank will need to cut rates to avoid such an outcome.

However, Tuesday’s market recovery was contained as traders refrained from making big bets, reassessing the impact of the pullback and awaiting fresh bullish catalysts.

Main indexes in Germany, France and Spain ended the session marginally high to 0.3% down.

Furthermore, data reflected a stronger-than-expected rise in German industrial orders, providing some hope for Europe’s largest economy, where recession is back on the cards following a contraction in second quarter.

The euro zone data do not scream ‘rate cut’ – the economy is growing at a steady pace and domestic inflation has stabilised at a high level,” said Jack Allen-Reynolds, Capital Economics’ deputy chief euro zone economist.

“But we suspect most ECB policymakers will judge a cut is justified next month, and recent concerns about the U.S. strengthen their case.”

Technology was the top sectoral gainer, up 1.7%, led by semiconductor stocks such as ASM International, ASML and BE Semiconductor.

Heavyweight Novo Nordisk also rebounded with a 4.6% jump, its biggest one-day gain in nearly five months, ahead of the drugmaker’s quarterly results on Wednesday.

Italian bank Monte dei Paschi di Siena jumped 9% after raising its profit outlook and dividend payout goal through 2028.

Switzerland’s Sonova rose 6% after introducing a hearing aid that utilises real-time AI to improve speech clarity from background noise.

Industrial kitchen retailer Rational AG jumped 7.2% after its results.

Meanwhile, Bayer slumped 6% after following weak quarterly adjusted earnings, while Swiss healthcare company Galenica fell 4% after “underwhelming” first-half results.

(Reporting by Pranav Kashyap and Ankika Biswas in Bengaluru; Editing by Sherry Jacob-Phillips, Varun H K and David Evans)